Most IFAs wil have come across the old Talisman Scottish life schemes.  These were schemes taken out with Scottish Life between 1985 and 1992 and mostly contained a Guaranteed Annuity Rate GAR.

According to the pinks and Royal London who now own Scottish Life, between seventy and eighty per cent of policyholders are keen to take the cash in lieu of guaranteed pensions worth between seven and fifteen per cent.  The rate of 15% was held for 12 months between 1989 and 1990. One former client of mine bagged a 19% per annum annuity with his personal pension by transferring to an Eagle Star annuity on retirement.  Of course, as IFAs we never got any thanks for finding this deal in November 1989, but perhaps we shouldn’t have got all the credit either.

The amount of the uplift the old Scot Life schemes will pay will depend on the terms of the individual policy and when it was taken out, but most are expected to be in the range 40-80%.  IFAC sense that nearly all people take the cash – bird in hand or bird in the bush – but the logic is flawed, and many will be well advised to take the annuity rate, as most live longer than they expect to live, as medical science progresses.